IMA Announces Third Quarter Results and Adjusts Second Quarter Results; Company's Results Impacted by Shift From Voice-Only To New Internet-Centric Solutions
Business Wire - November 18, 1999 16:44
SHELTON, Conn--(BUSINESS WIRE)--Nov. 18, 1999--Information Management Associates, Inc. (NASDAQ:IMAA), a leading global provider of synchronized, multi-channel e-business solutions, today announced results for the third quarter and nine months ended Sept. 30, 1999 and restated results for the second quarter ended June 30, 1999.
Revenues for the third quarter ended Sept. 30, 1999 were $8.0 million compared to $15.8 million for the third quarter ended Sept. 30, 1998 reflecting a down turn in product demand in the voice-only Call Center industry.
IMA reported a net loss for the third quarter of $6.3 million, or $.65 per share compared to a net loss of $1.9 million, or $.20 per share a year ago. The net loss for the third quarter was primarily the result of lower revenues, costs associated with the launch of IMA's majority-owned Internet subsidiary buyingedge.com, and costs associated with the development of the company's recently announced Internet-focused product line that is scheduled for release late in the fourth quarter.
Revenues for the nine-month period ended Sept. 30, 1999 were $30.2 million (restated) compared to $39.0 million for the nine-month period ended Sept. 30, 1998. IMA reported a net loss for the nine months ended Sept. 30, 1999 of $15.9 million, or $1.64 per share compared to a net loss of $8.3 million or $.87 per share for the same period a year ago.
The Company also announced restated results for its second quarter ended June 30, 1999. IMA's originally reported results for the second quarter of 1999 reflected revenues of $13.1 million, and a net loss of $1.8 million, or $.19 per share. IMA's restated results for the second quarter of 1999 reflect revenues of $9.9 million and a net loss of $6.3 million or $.65 per share. The change from the original reported net loss of $4.5 million reflects:
-- A license fee revenue reduction of $3.3 million and associated
sales and marketing expense reduction of $135,000 in connection
with an enterprise wide software license ordered by a reseller.
Based on a further review of the circumstances surrounding the
transaction, the Company changed its accounting for this
transaction from revenue recognition based upon delivery of the
software to revenue recognition based upon the assurance of
collectibility.
-- One-time charges of $581,000 relating to the formation of IMA's
majority-owned Internet subsidiary, buyingedge.com and the
issuance of the subsidiary's common stock to its minority
shareholder in the second quarter.
-- The capitalization of website development costs in accordance
with SOP 98-1, Accounting for Costs of Computer Software
Developed or Obtained for Internal use, in the amount of
$156,000, net of amortization. The Company should have
capitalized the website development costs incurred in the quarter
ended June 30, 1999.
-- An increase in the provision for bad debts of $920,000. In
connection with the third quarter review of the reserve for
doubtful accounts, the Company determined that a portion of the
identified additional reserves were more appropriately reflected
in the second quarter.
The Company has also received and responded to a comment letter related to the Company's Form 10-Q for the quarter ended June 30, 1999 from the Securities and Exchange Commission regarding, among other things, the Company's accounts receivable balances, the collectibility of such balances and the Company's revenue recognition policies in light of such balances. Although the Company believes that its accounting for accounts receivable and its revenue recognition policy is proper, as restated, a different conclusion would require further restatement of the Company's previously reported results.
The Company's net loss for the three and nine months ended Sept. 30, 1999 includes, respectively $1.3 million and $3.2 million of expenses relating to buyingedge.com. In connection with its plan to capture further marketshare, buyingedge.com intends to raise an additional $30-40 million in capital financing in the first quarter of 2000.
Al Subbloie, IMA's President and CEO said, "IMA is disappointed with the current results and specifically with the downturn in revenue from the Company's core business. However, we are excited about the planned introduction of our new Internet-centric suite of products that is expected to be available late in the fourth quarter. IMA's new products will enable businesses to create, manage and respond to demand in a highly effective manner by adding new e-commerce technologies to the core values of Customer Relationship Management (CRM)." In addition, Subbloie stated: "IMA is very excited about the progress and prospects of its majority-owned subsidiary, buyingedge.com, in the Internet reverse auction marketplace."
About IMA
IMA provides world-class synchronized, multi-channel e-business solutions that enable business success in the form of lasting, rewarding and profitable customer relationships. Gartner Group ranks IMA as a leader in customer service and support systems and as a visionary in sales applications. Over 400 global organizations including Bose Corp., Humana, ICT Group, Lloyds TSB, TXU, U.S. Cellular Corp. and Xerox depend on IMA products and services to help grow their business through the process of acquiring and retaining customers. IMA has headquarters in Shelton, Connecticut and offices and representatives worldwide. Contact IMA at imaedge.com, or request information via e-mail at info@imaedge.com, or by calling 1-800-776-0462.
NOTE: IMA is a registered trademarks of Information Management Associates, Inc. All other trade names are trademarks of their respective companies.
Except for the historical information contained in this announcement, the matters discussed in this announcement are "forward-looking statements" (as that term is used in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission (the SEC). In particular, IMA draws the reader's attention to the "Risk Factors" stated in the Company's Registration Statement on Form S-1 dated July 30, 1997 and its accompanying Prospectus, the Company's Quarterly Reports on Form 10-Q dated August 14, 1997, November 14, 1997, May 15, 1998, August 14, 1998, November 14, 1998, May 17, 1999 and August 16, 1999, the Company's Annual Report on Form 10-K dated March 30, 1998 and March 31, 1999, as well as to the Company's periodic and current reports as they are filed with the SEC.
INFORMATION MANAGEMENT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
(unaudited) (unaudited) (unaudited)(unaudited)
Revenues:
License fees $ 2,440 $ 8,706 $ 10,861 $ 21,429
Services and
maintenance 5,608 7,098 19,340 17,615
Total revenues 8,048 15,804 30,201 39,044
Cost of revenues 3,274 4,408 12,587 10,998
Gross profit 4,774 11,396 17,614 28,046
Operating expenses:
Sales and marketing 4,802 5,807 16,039 14,479
Product development 2,677 2,167 9,077 5,879
General and
administrative 2,523 1,400 5,571 3,821
Provision for doubtful
accounts 887 1,816 2,617 2,778
Acquired product
development costs -- -- -- 7,658
One time settlement
charges -- 2,163 -- 2,163
Total operating
expenses 10,889 13,353 33,304 36,778
Operating loss (6,115) (1,957) (15,690) (8,732)
Other income (expense) (401) 179 (336) 716
Loss before provision
for income taxes
and minority interest (6,516) (1,778) (16,026) (8,016)
Provision for income
taxes 48 119 228 273
Loss before minority
interest (6,564) (1,897) (16,254) (8,289)
Minority interest (292) -- (328) --
Net loss $(6,272) $ (1,897) $ (15,926) $ (8,289)
Basic and diluted net
loss per share $ (.65) $ (0.20) $ (1.64) $ (0.87)
Shares used in computing
basic and diluted
net loss per share 9,670 9,676 9,698 9,558
Pro forma net loss:
Net loss for
buyingedge.com(a) (1,310) -- (3,206) --
Pro forma net loss
excluding
buyingedge.com(a) $(4,962) $ (1,897) $ (12,720) $ (8,289)
(a) Net loss for buyingedge.com includes expenses associated with the
pre-incorporation activities incurred by IMA and the post
incorporation buyingedge.com results, net of related minority
interest.
INFORMATION MANAGEMENT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
September 30, December 31,
1999 1998
(unaudited)
ASSETS
Current assets:
Cash and short term investments $ 3,932 $ 11,649
Restricted cash 8,934 -
Accounts receivable, net 11,700 16,487
Other current assets 3,434 1,985
Total current assets 28,000 30,121
Equipment, net 4,341 3,134
Other assets, net 4,025 3,983
TOTAL ASSETS $ 36,366 $ 37,238
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Convertible promissory note $ 3,985 $ -
Current maturities of capital
lease obligations 391 73
Accounts payable and
accrued liabilities 10,145 11,412
Deferred revenues 4,522 4,341
Total current liabilities 19,043 15,826
Other long-term liabilities 941 490
Minority interest 8,131 -
Shareholders' equity:
Common stock, no par value;
9,746,855 and 9,697,088 shares
outstanding at September 30,
1999 and December 31, 1998 58,507 54,691
Share to be issued in connection
with acquisition - 564
Cumulative translation adjustment (60) (63)
Accumulated deficit (50,196) (34,270)
Total shareholders' equity 8,251 20,922
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 36,366 $ 37,238
CONTACT: IMA
John A. Piontkowski
Chief Financial Officer
212-725-4500
john.piontkowski@imaedge.com
or
G.S. Schwartz & Co.
David King (media contact)
203-925-6805
dking@schwartz.com |
